HOUSTON – Home sales in Houston were strong in March, as a downturn in the energy industry failed to inflict serious damage to the housing market.
In March, 6,232 single-family homes were sold in the Houston area, up 3.8 percent from the 6,005 homes sold in March of last year, the Houston Association of Realtors reported.
“At the first of the year we were all very cautious. We were nervous about the impact of low oil prices on the real estate market,” says Houston realty broker Amy Bernstein of Bernstein Realty.
But so far this year, the housing market has kept churning ahead and home sales are up slightly in the first part of 2015, according to the Houston Association of Realtors.
At the end of the first quarter, 14,805 single-family homes were sold, up slightly from the 14,734 sold in the comparable first three months of 2014.
Last year was record-setting – the strongest year ever for Houston home sales. The Realtors association reported over 75,000 single-family homes were sold last year, the highest annual sales total in Houston’s real estate history and home prices hit record highs, too.
Several years of very strong job gains and population growth (Houston led the nation in population increases in 2014), heated the area real estate market to a high boil. The market was also boosted by exceptionally low mortgage rates, with 30-year interest rates below 4 percent.
But a sharp decline in oil prices means the economy will not be as strong in 2015 in Houston – the Energy Capital of the World – and oil companies have announced layoffs and spending cuts.
The price of West Texas Intermediate crude has fallen from a high of $107 a barrel last summer to around $50 a barrel today.
Already, the downturn in energy has impacted the local residential market somewhat, Bernstein says. “We are seeing fewer oil company transferees move to Houston.”
But for the most part, the local housing market appears hot.
As the spring buying season kicks into high gear, a whopping 6,004 sales are listed as “pending,” meaning they will likely be closed deals in the next month or so. It is one of the highest monthly pending totals ever reported by the association and a 30 percent increase over March 2014.
Inventory is remains tight with a 2.8-months supply of homes for sale, the association reports.
The median home price in Houston was $208,000 in March, up almost 9 percent from $191,000 in March of 2014.
Single-family home sales had declined in February, the first decline in six months. That had led some to believe that Houston’s housing market was finally running out of gas.
“It was great to have sales back in the black in March after February’s decline, but in order to satisfy the long-term needs of the Houston housing market, we need to see substantive growth in inventory levels, which remain at record lows,” says HAR Chair Nancy Furst with Berkshire Hathaway Home Services Anderson Properties. “It could take the remainder of this year to begin approaching what we consider a ‘balanced market,’ which is typically a five- to six-month supply of homes.”
On a national basis, the current supply of homes for stands at a more robust 4.6-months supply. (Months of inventory is the estimated time it would take to deplete the current inventory of homes for-sale based on the previous 12 months of sales.)
When the Houston market slowed after the recession, the inventory in Houston reached almost 8-months supply at times in 2010 and 2011.
Lawrence Yun, chief economist for the National Association of Realtors, says more robust home building is the key to getting the housing inventory back into balance.
Houston has been leading the nation in new home construction in recent years, according to John Burns Consulting, but the pace of building has not relieved the market of its tight inventory situation.
But unless home building jumps up sharply or home buying comes to an abrupt halt, the tight inventory situation in Houston will persist in 2015.
By Ralph Bivins, editor, Realty News Report